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tv   Street Signs  CNBC  November 8, 2019 4:00am-5:00am EST

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when it hits. [music playing] >> happy friday and welcome to "street signs. richemont shares loses its shine. french banks feel the heat a company slashes its m&a budget missing estimates in both corporate and retail arms. the rally fades in europe amid
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uncertainty with progress with autos and services leading the declines finland's 10-year bond yield jumps into positive territory. risen the most since president trump's election good morning and welcome to the show shares in richemont are deep in the read double digit revenue declines. the key market in hong kong overshadowed by the u.s. this is in contrast with other results. talking about the likes of lvmh.
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hermes is still slightly positive swatch down about 1% christian dior down about a quarter. so not immune, but you can see they are standing out today. i want to bring in our guest to discuss this in a little more detail last week, we were talking about the resilience of these luxury groups particularly lvmh and hermes not the case for richemont why is that? >> they have an average of 5% in hong kong while richemont has 10%. the departments that perform
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most are leather goods, jewelry and in part jewelry and watches. we see jewelry that is more resilient. >> let's talk about hong kong exposures. they said they are reevaluating their strategy do you think the sector could perhaps capitalize a little to look at rental costs >> for sure the luxury companies will knock on the door of the landlords asking for significant rent rebates what we have seen in hong kong is a drop of 60% in hong kong, they were not so understanding when asked about rent rebates i expect in the long run,
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probably the luxury company will rea sies the rea reassess their presence in hong kong. >> this happened in the late '90s different circumstance but similar that they placed a lot of eggs in that pie. do you think irrespective to what is happening in hong kong, the china market will continue to be a power house of strength in the future. >> i have a bullish view of china. i believe in the next years, china will be a leading growth and i think the large percent of luxury goods will be in china. >> let's talk about consolidation in the sector.
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another company is the talk of potential acquisition of tiffanys by lvmh it makes sense for lvmh from a geographic perspective >> more from a geographic perspective, i see more from a category perspective buying tiff knany, they will put together two of the biggest jewelry brands that is bvlgari and tiffany. i think it is a smart move lvmh is generating a ton of cash they have to put their cash to work >> when you look at the actual deal, they've been saying they are insistent on the $120 as a
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price. could we see a bidding war >> to be honest, i don't see any bidding war. i don't think anyone wants to enter in such a bid war with lvmh if the board of tiffany does not op oes, they have the lever to ask for a higher price >> we'll leave it there. let's take a look at how some of the markets in europe are fairing. starting with a heat map there is quite a lot of red on the boards this is in contrast with wall street and the three majors reaching record highs. that positivity didn't quite continue there are multiple reports suggesting that there is big
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news there is still a little bit of discussion going on within the u.s. administration as to whether that can go ahead. that put a bit of dampener there is a lot of red on the board. a lot is driven by corporate earnings down by 4.5 percentage point banking sector coming under pressure down about.4%. it has been a good week as a whole. looking at the individual indices. the ftse 100 down about half a percentage point weaker today. we had the bank of england meeting. two dovish dissenters sending a
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message. ftse 100 trading on the back foot of upcoming political uncertainty. cac a lot of exposure to the banks and luxury that's one of the reasons that particular index is trading weaker let's talk about global yields yesterday, we had a huge move in u.s. yields. the biggest since the election date in 2016 in u.s. about 14 basis points higher on the week today, with the risk of move, we are seeing a emerging again. and the bund has come a long
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long way since then qe package and the cut was announced. 10-year guild, you want to consider potential fiscal plans. pointing to fiscal easing in the future one of the reasons why the uk curve is stephening up the 10-year bond in finland. paying attention to the fact that we are almost flat lined. it does tell you that the complex for the european fixed income is moving more positive, higher in yield. we spent a lot of time discussing negative yield and impact meanwhile, assets under management have risen to an all-time high of 2 trillion
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euros. forecasting the earnings will come at the top. the stock is trading a little weaker on the day to the tune of 2.2% as i mentioned, banking also in focus. credit agricole trading at a sharp rise the unit posted its highest third quarter revenue growth in three years with france's second largest bank across almost all product lines. the stock is down 3.8% there is a bit of weakeners. the french banking sector is under a little pressure today. speaking of which, the other
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natixis banks and attributing the move to high valuations in the payments industry also down 5.4% the airlines industry, iag has propertied a cut to its property forecast the british airways owner sees eps growth at 10% a year down from 12% last week, he expected global macroeconomic softness to continue while the company suffered from strikes which also hit the profit out looks iag trading but it has been a good run last three months up 20% also coming up, we'll cross live to brussels where eu finance ministers are looking to meet. more on that in a few moments. stay with us
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signs. junker says he does not believe president trump will slap tariffs on european cars he appeared confident saying, quote, you are speaking to a fully informed man the u.s. commerce department refused to comment elsewhere, eu commissioner says he hopes to reach a deal with the u.s. >> most of the world economy is now threatened by trade tensions that's why those must be resolved we think first and for most trade tensions with china. let's look at what happens in the days and weeks to come could be good news as far as eu and u.s. is concerned.
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i always thought we were more than allies and friends. between friends, you don't sanction each other. to me, that would be fully relevant we have some escalation between. ifs that not the case, the eu is fully ready to have the proper answers. that's normal. we will also need to find a common way >> willem joins us live. the story of auto tariffs has been hanging over the auto sector for many months now if you look at the key stake holders as well. juliana spoke with the ceo of k volkswagen earlier in the week is that what you are hearing in brussels as well
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>> a lot of the carmakers have focused on vesting in the u.s. and expanding plants there and talked about what tariffs would do to their business not just here but in the states that is something steve mnuchin and those in the u.s. have picked up on and applaud it. what they talked about today saying we don't know, we've looked to see. that is a reflection that europe just like china had to wait and see, often quite last minute the finance minister from the slovakian government, he thought as of right now he was more confident of the economy on the auto sector. he would be more optimistic now than he would be, say, a month
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ago. this is really not easy to answer but i hope that we are asking in the way that will avoid the tariffs but decisions are on both sides. the deal is always about the opinion of both sides but i am really, really confident that this would harm our trade relations that is not helping anybody in these wars and protectionism is bringing nothing to the economies of u.s. and economy of european union. >> president trump has implied, he won't look to move forward with broader tariffs anytime soon wilber ross also saying he doesn't think it will be necessary as members of the
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senate republican party like chuck grassley saying based on what he understands. the running for any such tariff so far, he doesn't expect these tariffs will take effect of course, it comes down to the man that sits in the oval office what he decides to do until the last minute is only what he knows. that's what makes it difficult for policymakers here and automakers to try and plan >> thank you very important topic for european sectors that of the threat of auto tariffs. pouring cold water over the comments from china. he told fox news there is, quote, no agreement to remove
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any existing tariffs, adding only president trump can make that decision. telling reuters it would be part of the agreement chinas imports and exports fell feeling the bite of beijing. china's trade surplus rose to $42.8 billion. >> china's october trade data surprise to the upside exports dropped by 0.9% from a year ago versus an estimate of decline of 3.9%. imports fell 6.4%. widening to $43 billion. analysts believe subdued global growth will weigh on exports u.s. and chinese officials have
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both said they discussed phasing out tariffs. the china commerce says some additional tariffs have to go. beijing wants the tariffs lifted at the same time by the same amount the time and place has yet to be decided. it appears to be an internal conflict about whether the u.s. should roll back tariffs a spokesperson told fox news that the trump administration is still very, very optimistic a deal could be reached very soon. >> let's pat out the conversation even more i'll start by asking you, do you think the risky assets and looking at the big bond sell
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off. do you think all of the good news has been priced in? >> clearly, our markets have moved sharply. the position was for a recession in 20120 the look at bond yields and more cyclical ones looks like the recession it looks like the trade deal is more likely. people have not participated or positioned in risk assets. the fear of missing out cannot dominate we'll see another move higher. >> you have to distinguish between phase one truth and the repealing of existing tariffs if that does go ahead how much of a boost would go higher.
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i'm not sure if that will be fully implemented. whether the other $63 billion of tariffs will be rolled back we'll see. there will be a time line if china implements the measures that trump wants markets have prepared, a lot of businesses have prepared for a 2020 recession if this recession doesn't come, you will have to at least restock your in v restock your inventory >> you've got this potential trade truce and other things
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is that a sign of the midcycle adjustments powell referred to is over for the time being >> it could be over. we expect one more cut but give or take that, it could be over for now in the sense that the economy gets better, it is fine not to count if these markets won't do well, those earnings will go up. the markets are at very low levels and look like it is going higher for here, other assets will trade on good news and the story doing more >> so good news is good news again. where is the emerging market in all of this? huge sell off in bonds a lot of the positioning this year has been in dollar credit i'm guessing that is not where you want to be if this cyclical
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rally continues. >> yes making a bet purely because u.s. rates came down. the growth is really bad they did well in debt because the rates went down. i don't think this will continue you will see em equities and the flow you want to have exposures to equities asian equities, brazil, russia if you can't do equities, you need local currency markets like south africa if not there, you go to places that benefit from the up swing >> south africa, that is an interesting choice especially what has been going on eek y
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economically and politically >> there is an old rule if everybody is looking at one thing, something else happens. everybody there has been focused on the fiscal situation and the risk of down grade by moody's. we do think the down grade happens but we think it is priced in. everybody knows about it out flows have happened. south africa is really the company that has the highest data especially the rand the rand gets stronger, everything else gets stronger. >> final quick one for you european equity markets are we finally going to see a bullish rally. they have underperformed versus the u.s. do you see that changing >> we have seen quite a bit of a catch up our team is turning a bit more
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neutral. turning a bit more neutral here but seeing the upside. if the global economy improves, that should be outperforming both europe and u.s. markets >> thank you for that. coming up on "street signs," another billionaire in the to ring. former new york leader may be gearing up to enter the democratic race. our democracy. here's the difference between me and the other candidates. i don't think we can fix our democracy from the inside. i don't believe washington politicians and big corporations will let that happen. the only way we can make change happen is from the outside. for me, this comes down to whether you trust the politicians
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>> welcome to "street signs. i'm joumanna bercetche, these are your headlines richemont shares loose their shines dragging rival swatch lower as protests in hong kong weigh on sales growth natixis shares sink and missing estimates in both corporate and retail arms. the rally fades in europe amid
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uncertainty over progress of the u.s./china trade deals disney beats fourth quarter expectations sending shares higher ceo bob igor talks up the deal days before the launch >> we are pleased to announce deals with amazon, microsoft, google significant progress in terms of distribution deals the momentum fizzled out we didn't see the same high reaction trading weaker. all of the focus has been on the
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progress of the phase one talks of where the signing would happen and what that means there is still a lot of questions there. the mood from europe is a lot more negative. ftse 100 trading down the market is with a lot of uncertainty with respect to the political climate as we move closer to the political elections. the dax in germany down about .4%. and cac in france is down. banking names and some of the luxury names richemont at about
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5% in trading. we have euro trading a tad weaker close to the flat line interesting despite the move that we had in fixed income. huge sell off in the u.s. that is having a bit of an imprint. one of the seasons that is trading on the back. cable in the uk trading around 1.2811 a bit of side ways movement today. let's talk about u.s. futures. i did mention the three majors yesterday made record highs. probably taking their cue from european equities.
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s&p about a point weaker, dow up about eight and nasdaq off by about 15 talking politics former new york city mayor michael bloomberg appears poised to jump into the u.s. political race news that the billionaire was making preparations to run we have the latest >> tonight, former new york city mayor michael bloomberg is preparing to enter the 2020 democratic race. he is expected to file paperwork in alabama where there is a friday deadline but he has not made a financial decision to run. the democrat turned republican turned independent turned democrat >> i'm a new yorker and i know a
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con when i see one >> if bloomberg enters, it would be a seismic shake up. now divided between leftis candidates and centrists candidates saying if he enters, bloomberg would be able to take the fight to trump and win >> a bloomberg candidate would be the biggest threat to biden >> claiming a climate emergency after satellite showed last month was the warmest october on record our next guest leads as the tech
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giant leads the work along with the very own tech reporter you were the first chief before moving to google can you talk us to some of these things you have and what you will do in the future. >> at google, we've been committed to operating as a carbon neutral business since 2007 we look to be as energy efficient as possible, we neutralize the rest of our impact through carbon emissions. it has been a big focus. we have been thinking about applying machine learning. >> has the transition been
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costly it does entail a lot of outlays, you are creating a new eco system surly that has to be quite costly >> we found a strong business case for our work. we have seen huge environmental. energy is a huge input the less energy we use, we can reduce costs the cost has come down it is competitive and even cheaper. it has been a strong play among the work what are you doing to address some of those concerns raised by the company itself >> sustainability has truly been a core value the greatest strength is the passion our employees have we engage across the company on
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sustainability doing full time rolls, part time rolls, volunteering and sometimes activism a lot of people are getting more engaged. we've been focused on it for a long time. >> even as this new accelerator fund this week to help make that transition, what is the purpose of that and are there more initiatives like that? >> just earlier this week, we announced our google first start up sustainer on development goals. we want to support social impact startups advise on monitorization, raise capital. it is important to us to help social impacts to do start ups in the world >> about a month ago, it claimed google made substantial
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contributions including the think tank that is a group that has been instrumental convincing the trump administration to withdraw from the paris deal how does that square up to what you are trying to achieve. people say it is quite hypocrite call >> we support groups across the political spectrum we are focused on organizations that support strong tech policy and access to open internet. we've been clear that a political support doesn't mean we agree across the board especially on climate change but they are happy to continue funding such think tanks even with the strong message you are putting out there that you want to be the leader revamping the
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brand. >> again, we are engaged with on organizations that have multi-issue platforms. we are partnering on internet. >> some of the companies you are partnering with. how broad does that effort extend in your efforts >> what we really like to think about is not only striving to build sustainability into everything we do but enabling everyone policymakers and individuals to drive change we've been platforms to be more sustainable at home. partnering with businesses moving on to the cloud can be great sustainability >> not just a topic for google but for businesses as well thank you to our guest from google and elizabeth coming as
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well and participating in the last conversation. european finance ministers are meeting in brussels today as concerns grow over the on growing trade spats with the us. i believe you have a guest with you? that's right i'm joined by the lithuanian investor let me ask you about trade we've heard a huge amount about u.s. china trade we hear little things about u.s. eu trade we had tariffs imposed with approval a couple of weeks ago i wonder how much the uncertainty about the eu/u.s. trade relationship impact in
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your mind across europe? >> that's a good question. another question to trade or not to trade i do believe that. this century, this kind of a question should be irrelevant but the world is different this uncertainty about to trade or not to trade, of course it has a negative impact across the globe and sure that this is happening. of course, the direct impact is different across countries but what we see now that next year, the global growth due to this kind of uncertainty would be followed up and it could be. i think and i believe that will win and of course take time.
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we should focus on the best possible solutions quick solutions. if we prolong this story if you don't have the option to remove that uncertainty for a reason. is there time for governments in europe like your own to think about a coordinated fiscal response of course in those countries which have a positive fiscal space should use it
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we should stick to the fiscal rules. we also could recommend other countries as well to stick to agreements on the fiscal requirements i think everybody should do its job. stimulating the fiscal spaces. those countries that do not have the fiscal space should stick to the fiscal discipline. >> i can't help but bring up the obvious divisions. this is the real challenge you have a country like italy where their debt pile is forecast to increase next year then countries like yours where you would like to spend more
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money but because you are following the rules, you can't does that decision ever get bridged, do you think? >> it is an important question a lot has already been done in this area. there are some specific countries which are not so -- not so accurate in the common agreements in any case, other countries that we'll be far stronger if everybody sticks to the rules that we agreed upon a lot of
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these decisions were made during the crisis what purpose can do now is insist those that have trouble with their deficits come in line there is no way to have a surplus to have more do you think there needs to have a mechanism they should do their own decisions. do the rules need to change? >> those should also be preserved. those that have fiscal space that should be on their own decision >> that was the lithuanian finance minister talking to us
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herein side the eu council building >> excellent insight there thank you for bringing us the latest on the story of the potential trade front between u.s. and eu. >> coming up, find out how the lion king helped the media giant days ahead of its streaming launch
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>> welcome back. shares in disney after the media giant beat expectations. the success of lion king and toy story 4 help them beat the line. the ceo bob igor spoke about the quarter and confirmed that streaming service disney plus is quote, ready to go >> a solid quarter driven by great performance by our studio with a tremendous performance
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and then parks as well >> there is a lot of focus on streaming. that division lost less than expected as we get ready for disney plus to launch, can you give us updates on how it stands >> it is ready to go, i'm glad to say we tested it on the netherlands. it did not have original content but it was extremely well received very navigatable easy to use, elegant, great access to our brands and story telling. that was positive. >> any news about distribution deals. questions of whether i'll be able to download it from amazon. >> we have deals with amazon,
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apple, microsoft, lg, google amazon being the latest one. >> let's broaden the conversation looking at the earnings of disney, that income has fallen to $1.1 billion from $2.3 billion that is said to be because of all that they are vesting. >> this is arguably the biggest moment for disney as a corporation in the 21st century. it is really a case of the medium companying becoming a tech company this is a direct reversal of
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netflix's decision to vest in original content >> so media trying to take on tech, what is the advantage they have you would think it is content. disney already has hours and hours of content is that their edge here? >> undoubtedly the robust library is a big factor. they are going to market with thousands of hours of proven market i reference netflix because they
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are the leaders. the challenge which netflix have to aspire to and what disney have already achieved is disney is now in a position to weaponize that fan relation. we do a lot of thinking around fandom in an on demand digital environment, unless you have a stand out, there is a challenge for how to gain audience share where we have conflicting demands. >> what do you think about their target market? is it directed to children and parents of children?
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>> that's the crucial distinction. it is the parents who need to have an entertainment resource for their kids talk about the positioning in the u.s. market. we already have two big strong threats in netflix's and amazon prime. being able to insert themselves into the household discretionary spend. they've already proven that library. when disney have identified they want two-thirds of the 90 million u.s. subscribers to come from international markets, the disney brand is the difference none of the other services have that level of international recognition for content that
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people already know what to associate with disney. it is a kite mark, a stamp of credibility which is going to get them significant competitive advantage. >> let's see, launch is next week plenty of others to contend with amazon, apple plus, peacock, our parent company thank you for joining us on "street signs" today a quick look at u.s. futures s&p and nasdaq seen a little lower. dow higher on the back of another record ending on wall street last night. that's it for us "worldwide exchange" is coming up next. it only becomes more entangled. unaware that an exhilarating escape is just within reach.
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>> it is 5:00 at cnbc global headquarters futures treading water s&p and nasdaq lost another round there. a potential deal on tariffs reportedly facing resist tent from within the white house. entering the race. former new york city mayor michael bloomberg is apparently looking to jump into that crowded 2020 field of candidates disney beats the stree


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